Types of Energy Tariffs Explained

   

The Different Types of Energy Tariffs – Explained

The world of household energy can be a confusing place for most consumers. With dozens of suppliers offering the same product, but charging vastly different amounts for it, it’s easy to find yourself confused.That’s why here, we will explain the tariffs in easy-to-understand terms.

There is several types of tariffs on the market, but they tend to fall into 3 types:

  • Standard Variable Tariffs – The most common in the UK, and almost always a bad deal!

  • Cheap Fixed Deals – A great way to secure & lock in energy savings for up to 3 years

  • The Discounted Variable Tariffs  – A rate that goes up and down based on wholesale rates

Let’s begin with the worst yet most common tariff out there – the Standard Variable Tariff, some time called an SVT.

The Standard Variable Tariff

The most common in the UK, and almost always a bad deal!

This is the type of energy tariff you do not want to be on. A standard tariff is a suppliers basic offering. Typically they are drastically more expensive than the cheapest discounted tariffs available. If you have not shopped for a new energy deal, your old fixed tariff has lapsed, or you have just moved into a property and are the new bill payer then you will be on a standard deal. If you fall into the latter camp be aware and forewarned about letters from an incumbent supplier telling you that you “need not do anything” as you’re all wired up on their tariff. This is a slightly deceitful trick meant to lull you into a sense of security, when you should be switching right away.

   

The Cheap Fixed Energy Deal

A great way to secure & lock in energy savings for up to 3 years

Over the last few years the cheap fix has dominated the energy tariff market. A cheap fix will usually be priced attractively to gather new business from new customers, and can often be hundreds of pounds a year cheaper than supplier standard deals. The fixed tariff will lock your rates until the fixed term period ends, at which time you must switch to a new tariff to avoid being rolled onto a standard deal.

The Discounted Variable Tariff

A deal that goes up and down based on great way to secure & lock in energy savings for up to 3 years

Less common these days is the discounted variable rate tariff. Historically these used to be cheap deals that suppliers would offer to grab new business whilst retaining the ability to alter the rates once the customer was acquired. Fortunately the popularity of the fixed deals has meant most suppliers cheapest tariffs are no longer discounted variables, however a few new suppliers still do take this route. A discounted variable, unlike a fix, offers you no protection from increasing rates so if the company decides that they need to increase their prices then most likely the rates of your tariff will be affected.

What tariff deal is best for you?

We would always advise that a cheap fixed deal is the best option.

The cheap fixed offer means that you can forward plan your expenditure, safe in the knowledge that the rates and terms will not change. It gives you the freedom to pay and forget about your energy until the end of the fixed term, which can really provide some useful peace of mind. You must however set a reminder in your calendar for when the deal will expire, we advise 49 days prior. During this time you may shop for a new tariff and be unaffected by any cancellation penalties your old tariff may carry should you decide to switch.

Want to see how much you could save on energy?

You may be able to save hundreds of pounds by switching to a cheap gas and electricity supplier. Energyhelpline compares ALL energy companies so that you find the best deals.  Our service is free and completely impartial.  Every year, we help over 100,000 UK cut their gas and electricity bills.

Click here to switch & save on energy

Need help with selecting the best tariff for you?

Talk to one of our advisers, 7 days a week at 0800 074 074 – Mon to Fri – 9am to 8pm, Sat/Sun – 9am to 5pm

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